General Electric’s Connecticut departure: Was it increasing taxes that caused the company to flee the longtime home of their headquarters, or was there more to the story?
For 42 years, General Electric’s headquarters resided in Fairfield, Connecticut. This town of around 60,000 located about an hour and a half northeast of Manhattan, New York. In 2015, the company announced it was considering a move stating that “Retroactively raising taxes again on Connecticut’s residents, businesses and services makes businesses, including our own, and citizens seriously consider whether it makes any sense to continue to be located in this state.” In January of 2016, the company confirmed that they were planning to move the company headquarters out of state, to Boston, Massachusetts.
The Reason Why
Reports were mixed about the true reasons for the company leaving the state of Connecticut. It can’t be ignored that in June of 2015, the governor of Connecticut signed into law a $1.5 billion tax hike that tripled sales tax on data processing, as well as a reporting requirement that increased GE’s tax liability. However, one executive from General Electric called their location in Fairfield County “a morgue” and said he hated the location.
Jeffrey Bornstein told The Wall Street Journal that it was likely the company was going to leave regardless of the tax situation. He was quoted as saying that “From the get-go, we knew we wanted to be in a place that was vibrant and entrepreneurial, where you could walk out your door enriched by your environment and your ecosystem.” In the end, although Boston did not offer the best financial incentives for the company to move their headquarters there, they picked Boston because of the “cultural fit and dynamism” that they saw in Boston.
General Electric is now operating out of temporary offices in Boston, while they build a new $200 million headquarters, slated to be finished sometime in 2019.
